Opposition Brief — Read v. Medical X-Ray Center, P. C.

No. 97-263

In The

Suprene Court of the United States

— >

October Term, 1996

RALPH L. READ, M.D.,

MEDICAL X-RAY CENTER, P.C.,

Respondent.

Court of Appeals for the Eighth Circuit

RESPONDENT?’S BRIEF IN OPPOSITION

WILLIAM P. FULLER JOHN J. MILES

FREDERICK M. ENTWISTLE Counsel of Record

JAMES E. MOORE OBER, KALER, GRIMES

WOODS, FULLER, SHULTZ & SHRIVER, P.C.

& SMITH P.C. 1401 H Street, N.W.

300 South Phillips Avenue Suite 500

Suite 300 Washington, D.C. 20005

Sioux Falls, South Dakota 57104 (202) 326-5008

(605) 336-3890

Attorneys for Respondent

71980 , fvz ;

800) 3 APPEAL « (800) 5 APPEAL « (800) BRIEF 21 Apoeiiate

Services, inc.

i

QUESTIONS PRESENTED

The Respondent, Medical X-Ray Center, P.C., restates the

questions presented as follows:

1. Whether the court of appeals erred in holding that the

Petitioner failed to present substantial evidence that his injury and

damages were caused by any unlawful conduct of the Respondent.

2. Whether, based on the facts presented at trial, Section 2 of

the Sherman Act required the Respondent to provide coverage for

the Petitioner’s medical practice unconditionally on Petitioner’s

own terms.

ii

PARTIES TO THE PROCEEDINGS

The Respondent, Medical X-Ray Center, P.C., has no parent

or subsidiaries.

eet it i ti te we or ie me me De eS /, /,

_— NS SS SO ee

|

|

iti

TABLE OF CONTENTS

Page

RO EE nn ccc ccccccccscccccccces i

Parties to the Proceedings ...............ccccceee: li

eats a bakes es kaeecieee ds ili

SE iv

ID avi ncccavnscssccnessncesce l

ns anna bdecdé ike kasd ae ]

IIE os ov sc nen wcncansesaces 2

a 7

Reasons for Denying the Writ .................... 9

I. The Eighth Circuit’s Decision Does Not Conflict

With Any Decision Of This Court Or Of Any Court

ish ahs 0a Sirk wets quhcicme ache 11

A. The Decision Does Not Conflict With Lorain

NS cc cceencenanasesee 11

B. The Decision Does Not Conflict With Any

Other Decision Of This Court Or Of Any

SID, dads cewedscdeessces vt

II. This Case Presents No Legal Or Policy Question

On Which This Court’s Guidance Is Needed. .. 23

a

iv

Contents

Page

A. The Decision Will Not “Pave[ ] The Way For

Exclusionary Conduct”. .....cccssceces 23

B. This Court Does Not Need To Reaffirm That

The Antitrust Laws Apply To The Health-Care

MO. a5 4500.96560600 0840 be) SKA RS 24

CIN kb cv eucanddunone scans eemeudndneahenne 26

TABLE OF CITATIONS

Cases Cited:

Abcor Corp. v. AM International, Inc., 916 F.2d 924 (4th

Ge PEE do xv dane seenseasaeeuseieebewedees 16

American Medical Association v. United States, 317 U.S.

SEE abides enccebenaceneraeeeaeeeress 24

Aspen Skiing Co. v. Aspen Highlands Skiing Corp., 472

oe 1 een era 11, 12, 13, 14, 16

Bell v. Dow Chemical Co., 847 F.2d 1179 (Sth Cir. 1988)

di Meanie he hk eo ed ae EGR e ea eke ari 21, 22

Boulware v. Nevada, 960 F.2d 793 (9th Cir. 1992) .... 25

Chicago Professional Sports Limited Partnership v.

National Basketball Association, 961 F.2d 667 (7th Cir.

1992), cert. denied, 506 U.S. 954 (1992) ......... 19

Contents

Continental Ore Co. v. Union Carbide & Carbon Co., 370

ED i hb daconkeweeecede sckadauweea:

Continental T.V., Inc. v. GTE Sylvania, Inc., 433 U.S. 36

SEN cient hesdnsanwnands eewteaeenaauneeaas

Copperweld Corp. v. Independence Tube Corp., 467 U.S.

PID 0 cn scan tenevavexweatwesekeusaheeks

Eastman Kodak Co. v. Image Technical Services, Inc., 504

ee Ol Pe eer Onna

FTC v. Freeman Hospital, 69 F.3d 260 (8th Cir. 1995)

General Leaseways, Inc. v. National Truck Leasing

Association, 744 F.2d 588 (7th Cir. 1984) .........

Hecht v. Pro-Football, Inc., 570 F.2d 982 (D.C. Cir. 1977),

cert. denied, 436 U.S. 956 (1978) ...............

Hospital Building Co. v. Trustees of Rex Hospital, 425

eds CD ono. 6 64.04444b5bbRa ones

Illinois v. Panhandle Eastern Pipe Line Co., 730 F. Supp.

826 (C.D. Ill. 1990), aff’d, 935 F.2d 1469 (7th Cir.

1991), cert. denied, 502 U.S. 1094 (1992) ........

Lorain Journal Co. v. United States, 342 U.S. 143 (1951)

(éutweavkeue es Cau kis a eeueeeasueuees 11, 12,

Page

10

18

21

12

25

19

10

24, 25

13, 14

vi

Contents

National Association of Review Appraisers & Mortgage

Underwriters, Inc. v. Appraisers Foundation, 64 F.3d

1130 (8th Cir. 1995), cert. denied, 116 S. Ct. 1676

(STE sds cc ncnnvddcntadanann scans aeeeeernans

Ohio-Sealy Mattress Manufacturing Co. v. Sealy, Inc., 585

F.2d 821 (7th Cir. 1978), cert. denied, 440 U.S. 930

GOTO oh civ ndesdanednenecdsa eae

Olympia Equipment Leasing Co. v. Western Union

Telegraph Co., 797 F.2d 370 (7th Cir. 1986), cert.

Page

25

21

See, GOO WB. FIR CURED. oc acencsccsasiass 13, 16, 24

Polk Brothers, Inc. v. Forest City Enterprises, 776 F.2d

te Le reer re rer ey Te

Rothery Storage & Van Co. v. Atlas Van Lines, Inc., 792

F.2d 210 (D.C. Cir. 1986), cert. denied, 479 U.S. 1033

REET Pe re ny ere

SCFC ILC, Inc. v. Visa U.S.A., Inc., 36 F.3d 958 (10th Cir.

1994), cert. denied, 115 S. Ct. 2600 (1995) .......

Summit Health Ltd. v. Pinhas, 500 U.S. 322 (1991) ...

Telex Corp. v. International Business Machines Corp., 510

F.2d 894 (10th Cir.), cert. dismissed, 423 U.S. 802

PPP ain 6cnksadankseeace kas egan eee

Trace X Chemical, Inc. v. Canadian Industries, Ltd., 738

F.2d 261 (8th Cir. 1984), cert. denied, 469 U.S. 1160

CIPD 6 ced nkscncnuecdautacusenee eee

16

16, 22

16

25

10

vil

Contents

Page

Trans Sport Inc. v. Starter Sportswear, Inc., 964 F.2d 186

SY . 625 ce eececkacens aun caeueses 16

U.S. Healthcare, Inc. v. Healthsource, Inc., 986 F.2d 589

RS hos Buse eee ak eens cewalees 20

United States v. Brown University, 5 F.3d 658 (3d Cir.

ttl. 1 cles oleh We can eee ee hee en ane 23

Statutes Cited:

A eee ag Ca alee wee Vs bas Ole ac ee

a eG ake ee ek bee oaks 7, 10, 15, 16, 21, 24

EE dss wn ok Wak Sk OE MOREA Ee Oe 9

Rule Cited:

Federal Rule of Civil Procedure 50 ................ 8

Other Authorities Cited:

I ABA Section of Antitrust Law, Antitrust Law

Developments (4th ed. 1997) ..........ccceeeeee 12, 16

Patrick J. Ahern, Refusals to Deal after Aspen, 63 Antitrust

BR ee ee ere re ae ree 16

III Phillip Areeda & Herbert Hovenkamp, Antitrust Law

Lo RE ee ee fr ar er ee ee ae er 21, 22

viii

Contents

Page

IIIA Phillip Areeda & Herbert Hovenkamp, Antitrust Law

(| PROC eET ECT re ee eer 12, 14, 21, 22, 24

Herbert Hovenkamp, Federal Antitrust Policy (1994) . 16,17

Michael Malina, Supreme Court Update — 1985, 54

Amtedt 1.5. FOP (IFES) oc cesecececascessaucss 13

Edwin Mansfield, Microeconomics (3d ed. 1979) ..... 17

1

STATEMENT OF THE CASE

A. Introduction

The Petitioner, Ralph L. Read, M.D., a former shareholder-

employee of the Respondent, Medical X-Ray Center, P.C. (“MXC”),

seeks review of the Eighth Circuit’s decision that he failed to present

substantial evidence that any unlawful conduct by MXC caused

the damages he claimed. Read argued to the Eighth Circuit that

“MXC has appealed only the rejection of its own version of the

facts” (Appellee’s Brief at I), and in his Petition for Rehearing that

the “appellate panel’s adoption of [MXC’s] evidence violate[d] the

Seventh Amendment-prohibition against redetermination of jury

verdicts” (Plaintiff/Appellee/Cross-Appellant’s Petition for

Rehearing and Suggestion for Rehearing En Banc, Required

Statement). Now changing strategy, he argues that the issues

actually were questions of law that the Eighth Circuit decided

incorrectly or that the court of appeals misapplied applicable

antitrust principles to the facts.

The Eighth Circuit’s decision does not warrant review by the

Supreme Court of the United States. The legal principles applied

by the court of appeals are well-established in antitrust

jurisprudence; neither those principles nor the Eighth Circuit’s

application of them to the facts conflicts with principles enunciated

by this Court or by any other court of appeals; and the decision

implicates no overriding point of federal antitrust law on which

guidance from this Court or other courts is lacking. Dr. Read merely

asks this Court to review whether, as a factual matter, the injury he

claimed was caused by any unlawful conduct of MXC. Both the

district court and the court of appeals reviewed precisely that

question with the record in front of them and answered no (although

the district court felt constrained to hold otherwise because of the

jury’s verdict). There is no reason for this Court to review the same

facts and question yet again.

B. The Relevant Facts

Dr. Read was a shareholder-employee of MXC, a professional

corporation of radiologists in Sioux Falls, South Dakota, from 1975

to 1988. He resigned in 1988 because his perceived heavy workload

and call schedule at MXC put him “in a very frustrated frame of

mind” (Tr. 1436); he was “burned out” (id. 171); he was

experiencing a “mid-life crisis” (id. 1451); and he did “not need

the money that full-time work produces” (id. 1449). He was tired

of his job and wanted to work part-time (id. 219-20), not taking

call on nights and weekends as other MXC radiologists did (Ex.

841).'

Dr. Read first tried to persuade MXC to restructure its entire

operation so that all its radiologists could work only when they

wished. Tr. 1432-35. When this failed, he resigned because of “the

way night call was scheduled” (id. 1786), even though he knew

that he would leave MXC shorthanded (id. 1700-01, 1710-11).

After first telling MXC that he did “not intend to practice

medicine for a year or more” (Tr. 1489-90), Read decided that he

wanted to practice part-time. To accommodate him and because it

was shorthanded, MXC entered into an independent-contractor

agreement with Read by which it paid him a yearly salary for twenty

weeks of work per year to help MXC with its cases. Under the

contract, Read was not on MXC’s call schedule for night, weekend,

or holiday work. Although he sporadically took call cases,? he was

inflexible and uncooperative in providing call coverage when

1. Dr. Read now claims that he “sought to create a different practice

style, one that emphasized quality of care rather than high incomes.” Petition

for Certiorari (“Pet.”) 5. Neither the record, nor Read's citation for that

proposition (Tr. 1450), supports that claim.

2. In Read's citation for this fact (Pet. 5, citing Tr. 1468), Read actually

said, “] wasn’t on the night call schedule or the weekend schedule.”

3

requested, a problem that MXC experienced with him throughout

his tenure as an independent contractor. Jd. 2023.

About March of 1990, claiming that MXC had “exploited”

him (Tr. 2031), Read decided to establish an independent solo

radiology practice. He made little or no effort, however, to compete

for business at what he now refers to as “the only point[s] of market

entry” (Pet. i) for radiologists in Sioux Falls. Then, when his practice

was not as successful as he wished, he left Sioux Falls for a

radiology fellowship and brought this antitrust suit against his

former partners alleging a number of purported predatory acts:

1. Read complains about MXC’s exclusive contract with the

Veterans Administration (“VA”) hospital in Sioux Falls. Pet. 5. The

VA had issued a request for proposals for a five-year exclusive

contract and was considering vendors at the time Read decided to

form his independent practice. Yet the uncontroverted evidence

showed that (a) while at MXC, Read had wanted to “dump” the VA

contract (Tr. 2584); (b) Read did not even submit a bid for the

contract (id. 2159); (c) the VA, not MXC, demanded the long-term

contract (id. 2123); (d) MXC won the contract after competitive

bidding and after the VA negotiated MXC’s price down (id. 2130);

and (e) the VA was extremely happy with the contract (id. 2162,

2166).

2. Read also complains about the contract between MXC and

Central Plains Clinic (“CPC”), a physicians group in Sioux Falls.

Yet the evidence showed that (a) MXC obtained that business

because it, in effect, offered CPC a lower price than in the past, a

fact Read admits (Pet. 5); and (b) Read made little effort to compete

for the contract (Tr. 1747-50).

3. Read claims that MXC entered into an exclusive contract

with McKennan Hospital in Sioux Falls. Pet. 6. Yet the evidence

showed that: (a) wiuile McKennan tried to force MXC to accept an

4

exclusive contract, MXC continually refused (Tr. 2374-77); (b)

McKennan could recruit other radiologists if it were dissatisfied

with MXC (id. 342); (c) Read himself admitted that there was no

exclusive contract (id. 1505); (d) there has been no exclusive

contract to-this day (id. 393); and (e) when Read told McKennan

that he wanted to practice there, McKennan raised concerns about

his ability to cover his practice, and Dr. Read never attempted to

address those concerns (id. 349-51). Accordingly, McKennan made

a unilateral decision to permit only MXC to read cases there (id.

2375) without any contract.

4. Read claims that MXC “enforced an exclusive contract at

Canton-Inwood” Hospital, a short distance from Sioux Falls. Pet.

5. But the evidence showed that: (a) an MXC physician, by himself

and apart from MXC, had the contract with Canton-Inwood (Tr.

1006); and (b) that physician was looking for a partner to work

with him at Canton-Inwood and decided to look for someone else

when Read refused to commit to become_a partner (id. 1117-34).

5. Finally, Read complains that MXC refused to cover his part-

time practice at Sioux Valley Hospital (“SVH”) — that it “declined

to accept unconditionally referrals from Dr. Read’s customers.”

Pet. 3 (emphasis added). Mischaracterizing MXC’s actions by

employing emotional and pejorative false allegations that MXC

“discriminated” against his customers and forced him to pay a

“penalty payment” or “monopoly rent,” Read argues that MXC

had an absolute duty to provide coverage for him, on his unilaterally

dictated terms, with no consideration of the practical issues and

problems that its covering his practice would cause.

The evidence was uncontroverted that MXC offered to cover

Read's practice if he would enter into a written coverage agreement

by which he would inform MXC in advance when he planned to

work at SVH and pay MXC an unspecified amount, to be negotiated,

for the problems and costs that MXC would incur in providing him

5

with coverage. Read, however, flatly refused even to discuss any

type of coverage agreement.

The evidence also disclosed a plethora of reasons why, without

some type of agreement, MXC would be leery of providing the

coverage that Dr. Read demanded. First, only after being forced to

do so did Read even post a schedule indicating when he would be

present at SVH to render services himself. Tr. 1579. As MXC

doctors testified, the scheduling of its physicians to cover the

different facilities at which it provides services was one of the most

difficult, complex, and divisive functions of the group. Jd. 156,

168. MXC typically established its schedule six months in advance.

Id. 2066.

Second, Dr. Read did not even abide by the schedule he finally

did post. As he admitted, after posting a schedule stating that he

would be at SVH three hours a day, sometimes he was there more

and sometimes less. Tr. 1411. Not surprisingly, both hospital and

MXC personnel had difficulty reaching him when he was supposed

to be available. Tr. 2049, 2613.

Third, MXC knew from past experience with Dr. Read that, as

the district court explained, he had “almost a pathological dislike

for providing night and weekend coverage” (Petitioner’s Appendix

[“Pet. App.”] 20) and was uncooperative in trying to work out call

coverage (Tr. 1351).

Fourth, when Read finally did post a schedule of availability,

it stated that he would be at SVH only three hours a day during the

week (and none on Thursdays) and one hour a day on weekends.

Id. 1580, 1766-67. Thus, it was clear that Read’s practice would be

part-time at best. To cover Read's practice as he demanded, MXC

would have to ensure that it had available capacity at SVH at the

times when Read was absent during the workday. In addition, MXC

would have to cover Read's practice during the least desirable work

6

times — nights, weekends, and holidays.* Even an SVH

administrator testified that he was “not very comfortable” with

Read’s very limited hours of availability. Jd. 1233.

Fifth, MXC physicians expressed concern about potential run-

ins with Dr. Read after MXC read a test when Read was absent and

Read appeared unexpectedly and complained that MXC had not

left the test for him to read. Tr. 2048.

Dr. Read never approached MXC to request that the parties sit

down and discuss an arrangement by which MXC would cover his

practice. Tr. 142, 1771, 2268, 2605-06. When MXC physicians

took the initiative to do so, they found it difficult to communicate

with him. Jd. 3267. Testimony showed that MXC, had Read been

willing to discuss a coverage arrangement, would have tried to reach

some type of agreement to provide coverage. Jd. 2292.‘ Instead,

Read attempted to force MXC to cover his practice whenever he

might not be present through a so-called “choice card” system, by

which referring physicians would choose between Read and MXC;

but if Read were not present, MXC would be a default choice,

obligated to cover Read’s practice whenever Read, without

informing MXC in advance, chose to be absent. MXC naturally

objected to this procedure.

In an attempt to accommodate both Dr. Read’s coverage

demand and its own concerns, MXC took the initiative and had its

attorney draft a proposed coverage agreement and send it to Dr.

Read. The draft agreement provided that MXC would cover Read’s

3. Dr. Read's petition suggests that MXC’s concerns about his

availability were limited to night and weekend coverage —

so-called “after hours.” Pet. 18. That is incorrect. Rather, Read also expected

MXC to cover his practice during the majority of all workdays.

4. The record showed that, as a factual matter, MXC did cover Read's

practice. Tr. 1304-05, 1357, 2048-49.

7

practice if Read would provide MXC with his work schedule in

advance and pay MXC a fee to be negotiated. Tr. 2060-61.

Testimony showed that MXC’s primary concern in seeking a written

agreement was to lock Read into and obtain a schedule of his

presence at SVH so that it could schedule its radiologists

accordingly (id. 1356, 2060-65, 2070, 2612) and that MXC would

have signed the contract if Read had paid it as little as one dollar.

MXC’s desire for the contract had “nothing to do with the money”

(id. 2064).

Read waited almost three months before even acknowledging

the draft. Tr. 1802-04. Calling it “some kind of practical joke” (id.

1601), he told MXC’s attorney when they finally met to discuss

the draft that he would not pay even one dollar for coverage (id.

1646-47, 1806-07). But it was not just the money to which he

objected; rather, he rejected the rest of the contract as well. Jd.

1649. He told MXC’s attorney to stop working on any contract (id.

1648) and left town for a radiology fellowship for which he had

applied before he responded to MXC’s draft coverage agreement.°

Ironically, it was Dr. Read, not MXC, who refused to deal.

C. The Decisions Below

1. After trial, the jury found that MXC violated both Sections

1 and 2 of the Sherman Act. The district court readily granted

MXC’s motion for judgment as a matter of law on Dr. Read's

Section 1 claim. It held that the evidence failed to show any

agreement with SVH (because Read could always practice there)

(Pet. App. 17) or at McKennan (because although “McKennan .. .

wanted to enter into an exclusive contract. . . the defendant refused

—ae

5. Read incorrectly refers to MXC’s draft agreement as a “take-it-or-

leave-it” offer. Pet. 7. That the money term in the contract was left blank and

that the meeting between MXC'’s attorney and Read was to discuss provisions

that the contract should include belie this statement. The draft contract was

just that — a draft to start discussion.

8

to enter into such agreement’) (id.). The court recognized that MXC

did have an exclusive contract with the VA (which MXC did not

dispute) but that MXC merely won a competitive-bidding contest

and that “plaintiff also could have submitted a bid.” Jd. 18.

The district court came within an inch of granting MXC’s

motion for judgment as a matter of law on Dr. Read’s Section 2

monopolization claim as well because it believed that Read failed

to prove that any injury he suffered was caused by MXC rather

than by his own shortcomings. Notwithstanding its view that Read’s

practice failed because of his own lack of effort, the court “yield[ed]

[its] views of the facts to the jury’s findings.” Jd. 29.

Numerous facts supported the district court’s belief that Read,

himself, caused any injury he suffered: (a) His “unwillingness to

work any kind of a reasonable work schedule” and refusal to cover

or obtain coverage for his practice (Pet. App. 20); (b) the obligation

of MXC’s radiologists to pay other radiologists for back-up when

they did not want to take their scheduled call, but Read’s refusal to

do so (id. 16); (c) Read’s refusal of MXC’s offer of coverage, even

if the cost were as little as one dollar (id. 15-16); (d) Read’s business

“plan [that] was based on requiring defendant to cover his practice

without any cost to him” (id. 19); (e) Read’s “almost pathological

dislike of being on call nights and weekends” (id. 20); and (f)

MXC’s lack of obligation to cover Read’s practice, “particularly in

view of plaintiff's unwillingness to advise defendant of when he

was not going to be available” (id.).

2. The court of appeals merely acted on the district court’s

conclusions. It, in effect, reminded the district court that juries are

not infallible and that Rule 50 exists to permit trial courts to correct

obvious mistakes. Specifically, and for almost the same reasons as

the district court, the Eighth Circuit concluded that “a reasonable

jury could only find that Dr. Read’s business failed because of his

own competitive flaws. Thus, Dr. Read did not establish causation,

an essential element of his claim . . . .” Pet. App. 3.

9

The Eighth Circuit’s opinion is-far from the “summary

disposition” that Dr. Read unfairly claims it is. Pet. 24. Rather the

opinion itself shows that the court considered each instance of

purported predatory conduct in reaching its decision. Because the

parties’ briefs had focused on Read’s claim that MXC had caused

his injury at SVH by refusing to cover his practice, the Eighth Circuit

also focused on that issue. It recognized that MXC’s primary

concern in seeking a coverage agreement with Read was to ensure

that MXC would know when it had to provide coverage: “MXC

was willing to incorporate Read on its SVH schedule to ensure 24-

hour coverage of his patients if Dr. Read signed a coverage contract

and provided his own schedule in advance.” Pet. App. 4. The court

of appeals emphasized that Read did not even acknowledge MXC’s

offer of coverage for three months and then “informed MXC of his

refusal to negotiate a coverage contract for any price.” Jd. 5.

Accordingly, it concluded that “Read’s lack of coverage cannot be

blamed on MXC.” Jd. 6.

The court of appeals indicated that because of its decision on

the causation issue, deciding whether MXC engaged in predatory

conduct was unnecessary. In dicta, however, it explained that MXC’s

request for a coverage contract was not a predatory act because

MXC had “legitimate business justifications” for its actions. Pet.

App. 8. It considered that Read wanted to “ ‘free-ride,’ avoid the

cost of 24-hour coverage by forcing MXC to provide it for him for

free, so he could undercut MXC’s prices” (id. at 6, 8) and that

MXC needed Read’s schedule of availability (id. at 4). Accordingly,

the court of appeals reversed the district court’s decision denying

MXC’s motion for judgment as a matter of law on Dr. Read’s

Section 2 claim.

REASONS FOR DENYING THE WRIT

Rather than focusing on the Eighth Circuit’s holding — that

he failed to prove “causation,” a requirement under Section 4(a) of

the Clayton Act, 15 U.S.C. § 15(a), for every plaintiff seeking

10

damages — Dr. Read focuses on the “predatory-conduct” element

for monopolization liability under Section 2 of the Sherman Act,

claiming that MXC refused to deal with him. But Dr. Read

concedes, as he must, that MXC did not refuse to deal; the parties

agree that MXC offered to provide coverage for Dr. Read’s practice

if he would enter into a coverage agreement with MXC. Thus, Dr.

Read’s petition has to focus almost exclusively on the question of

whether Section 2 required MXC to provide coverage for his

practice, to use Read’s word, “unconditionally” (Pet. 3); that is,

without Read informing MXC of when it would have to furnish

coverage and with Read paying nothing for that coverage. Nothing

in the antitrust laws required MXC to disrupt its own operations or

to subsidize Read’s practice so that he could work part-time.®

6. Dr. Read raises two other minor points that merit little discussion.

First, citing Continental Ore Co. v. Union Carbide & Carbon Co., 370 U.S.

690 (1962), he claims that the court of appeals focused only on the SVH

coverage question rather than considering “MXC’s exclusionary practices as

a whole.” Pet. 20-22. A reading of the court of appeals’ opinion belies this

argument. Although the court of appeals did not include any explicit statement

to the effect that “Dr. Read, we have considered all your alleged predatory

conduct together and do not believe that singularly or in combination, it

constituted predatory conduct,” the opinion shows clearly that the court did

just that. The opinion discusses each alleged predatory act.

Second, Dr. Read argues that the court of appeals erred by holding that

a contract that forecloses competitors can be excused as a “customary

practice.” Pet. 19-20. The court of appeals, however, did not hold or even

suggest that this fact would dispositively resolve the question of whether

MXC’s request for a coverage agreement was predatory. The court simply

mentioned it as one fact that, at most, it felt was relevant. Moreover, contrary

to the language in Hecht v. Pro-Football, Inc., 570 F.2d 982, 998 (D.C. Cir.

1977), cert. denied, 436 U.S. 956 (1978), that such evidence is not relevant

(Pet. 19), the fact clearly is relevant in determining whether particular conduct

is predatory. That those without monopoly power engage in the same conduct

is probative that the conduct has a legitimate business justification and is not

undertaken solely to monopolize a market. E.g., Telex Corp. v. IBM Corp.,

510 F.2d 894, 927-928 (10th Cir.) (noting that ordinary business practices

are not predatory), cert. dismissed, 423 U.S. 802 (1975).

11

Understandably, but erroneously, Read argues that the court

of appeals’ opinion indicating that MXC had no such obligation

conflicts with decisions of this Court, conflicts with decisions of

other courts of appeals, and involves a principle of law on which

guidance is absent but necessary. The reason that Dr. Read’s petition

should be denied is simply that none of these arguments is correct.

I.

THE EIGHTH CIRCUIT’S DECISION DOES NOT

CONFLICT WITH ANY DECISION OF THIS COURT OR

OF ANY COURT OF APPEALS.

A. The Decision Does Not Conflict With Lorain Journal Or

Aspen.

Contrary to Dr. Read’s assertion, neither Lorain Journal Co.

v. United States, 342 U.S. 143 (1951), nor Aspen Skiing Co. v. Aspen

Highlands Skiing Corp., 472 U.S. 585 (1985), are “directly

applicable here.” Pet. 11. Thus, it should have come as no surprise

to Dr. Read that the Eighth Circuit did not cite them.

1. Unlike the defendants in Lorain Journal and Aspen, who

refused to deal with their competitor, MXC did not refuse to deal

with Dr. Read. It offered to negotiate a coverage contract, which

he refused even to discuss. Because of Dr. Read’s refusal, neither

court below, unlike the courts in Aspen, could determine if a firm

offer might have been made, what the terms of that offer might

have been, or whether an agreement might have been reached. Dr.

Read, rather than MXC, was the party that refused to deal.

2. Both Lorain Journal and Aspen hold that any duty to deal

with competitors, even by a firm with monopoly power, is the

exception rather than the rule. The firm has a “general right” not

to deal, but that right is “qualified.” Lorain Journal, 342 U.S. at

12

155; see Aspen, 472 U.S. at 600. “When such a duty is found, it

must be treated as exceptional.” IIIA Phillip Areeda & Herbert

Hovenkamp, Antitrust Law { 765b at 101 (1996) (“Areeda &

Hovenkamp”). Under no circumstances, however, does any firm

have an “unconditional” duty to deal on terms dictated unilaterally

by its competitor. See Illinois v. Panhandle E. Pipe Line Co., 935

F.2d 1469, 1484 (7th Cir. 1991) (“Monopolists needn’t acquiesce

to every demand placed upon them by competitors or customers.”),

cert. denied, 502 U.S. 1094 (1992); Trace X Chem., Inc. v. Canadian

Indus., Ltd., 738 F.2d 261, 267 (8th Cir. 1984) (“ ‘Section 2...

does not give purchasers the exclusive right to dictate the terms on

which they will deal,’ . . . nor does it require a monopolist to accede

to every demand of its competitors or customers”), cert. denied,

469 U.S. 1160 (1985).

3. As Dr. Read recognizes, conduct is not predatory if a

legitimate business justification exists for it. Pet. 11 n.3 (citing

Eastman Kodak Co. v. Image Technical Servs., Inc., 504 U.S. 451,

483 n.32 (1992)); see generally I ABA Section of Antitrust Law,

Antitrust Law Developments 274-75 (4th ed. 1997) (“even if a

monopolist’s refusal to aid a competitor is based partly on a desire

to restrict competition; antitrust liability may be avoided if the

monopolist’s conduct was also based on a legitimate business

justification”).

In Lorain Journal, the defendant newspaper made no attempt

even to put forth, much less prove, a legitimate business justification

for its refusal to accept advertising from customers who also

advertised on the radio station, and thus the courts there had to

loot no further than the challenged conduct by itself. There was

nothing more than a refusal to deal by a firm with monopoly power

solely for the purpose of driving its competitor from the market.

Indeed, this Court explained that the lower court “found expressly

thatthe purpose and intent of [defendant’s conduct] was to destroy

the broadcasting company.” Lorain Journal, 342 U.S. at 148-49.

13

Here, there was no such finding and could not have been; to the

contrary, both the district court and court of appeals found that

MXC requested a coverage agreement for other, legitimate reasons

— an issue not even before the courts in Lorain Journal.’

4. This Court’s decision in Aspen, if relevant to this case at

all, supports MXC because its analysis clearly recognized that

refusals to deal, even by firms with monopoly power, are not

predatory if the refusal is justified by “any normal business purpose”

or “any efficiency justification.” Aspen, 472 U.S. at 608. In Aspen,

as one commentator explained, “[T]he narrow issue before the

Supreme Court was only whether there was evidentiary support

for the implicit factual finding that there was no valid business

reason for the defendant’s conduct.” Michael Malina, Supreme

Court Update — 1985, 54 Antitrust L.J. 289, 293 (1985). This

Court held there was such evidence, noting that “[pJerhaps most

significant . . . , [defendant] did not persuade the jury that its conduct

was justified by any normal business purpose.” Indeed, the Court

explained that the defendant “fail[ed] to offer any efficiency

justification whatsoever.” Aspen, 472 U.S. at 608.

7. In addition, the factual situation in Lorain Journal is not analogous

to that here. For Lorain Journal to be “directly applicable,” not only would

the legitimate-business-justification question have had to arise, but the radio

station would have had to demand that the newspaper supply it with employees

because it would be costly for it to hire its own so the radio station could stay

on the air 24-hours a day, without telling the newspaper when its employees

would have to work for the radio station. In that analogous situation, it seems

highly unlikely that any court would have found that the newspaper's refusal

to accede constituted predatory conduct. Cf. Olympia Equip. Leasing Co. v.

Western Union Tel. Co., 797 F.2d 370, 377-78 (7th Cir. 1986) (“But [plaintiff]

had no right under the antitrust law to take a free ride on its competitor's

sales force. You cannot conscript your competitor's salesmen to sell your

product even if the competitor has monopoly power and you are a struggling

new entrant.”), cert. denied, 480 U.S. 934 (1987). Olympia can be

distinguished on the ground that the defendant there was exiting the market,

but that fact would not have changed the analysis or the result.

ia

The situation here is the reverse: MXC did put forth and

persuade both the district court (although it believed that it had to

accept the jury’s verdict) and the court of appeals that its actions

were justified by a “normal business purpose.” Read can and does

argue that MXC’s normal business purposes were invalid as a matter

of law, but that was not the issue in, and so there is no conflict

with, Aspen.® Read is simply wrong in arguing that under the Eighth

Circuit’s reasoning in this case, the plaintiff in Aspen would have

been forced to accept the defendant’s “coercive offer” there. Pet.

12. Here, the court of appeals indicated that MXC’s offer was

reasonable and justified. In Aspen, the courts found the opposite.

There is simply no conflict between the analyses and results in

_ Aspen and here.

B. The Decision Does Not Conflict With Any Other Decision

Of This Court Or Of Any Court Of Appeals.

Perhaps realizing that neither Lorain Journal nor Aspen

supports his arguments here, Dr. Read moves to the crux of his

petition — that MXC had no legitimate business justification for

requesting a coverage agreement as a matter of law. He appears to

make three arguments: (1) that the prevention of free-riding may

not constitute a legitimate business justification in Section 2 cases

8. Aspen can be distinguished on a number of other grounds as well,

but perhaps the most obvious is that, as in Lorain Journal, the facts were not

analogous to those here. To make them so, the plaintiff in Aspen would have

had to demand that the defendant supply it with employees so that it could

operate its ski facilities around the clock without telling the defendant when

their services might be needed. Moreover, MXC, in requesting a coverage

agreement, did not break off a longstanding relationship with a competitor as

in Aspen, since Dr. Read had worked for MXC as an independent contractor.

Cf. II1A Areeda & Hovenkamp { 772c3 at 193, 194 (noting that Aspen did not

hold that a firm with monopoly power must enter into cooperative relationships

when none existed previously, “and there is no reason for thinking it would

have done so”; “[w]e would not interpret [Aspen] to give the plaintiff the

right to create a new venture where none had existed before”).

15

as opposed to in Sherman Act, Section 1 cases (Pet. 13 & n.5); (2)

that there was no free-riding problem in this case to begin with (id.

12, 13-14); and (3) that the Eighth Circuit should have provided

some type of more in-depth analysis to determine whether the costs

of Dr. Read’s free-riding “were in line with the costs sought to be

imposed on Dr. Read” (id. 12).

1. Preliminarily, Dr. Read erroneously assumes throughout

his petition that MXC’s free-rider concern was its only concern

about providing coverage to Read without a coverage agreement,

and thus that preventing Read from free-riding was its only

legitimate business justification. That assumption is incorrect. As

the record showed, MXC’s major reason for requesting a coverage

agreement was to force Read to establish, disclose, and furnish

MXC with a schedule of his availability at SVH so that MXC would

know when to have sufficient personnel there to cover his practice.

Uncontroverted testimony emphasized that the money Read would

pay, if any, under the agreement was a minor concern.

Given Read’s history of demanding to work part-time, his

unavailability when needed and called, his eschewing night and

weekend call, and the complexity of MXC’s scheduling personnel

to cover many facilities and its need to schedule far in advance,

MXC clearly was justified in requesting that Read inform it in

advance of when he would and would not cover his own practice at

SVH. Depending on the volume of Read’s work that MXC would

have to cover, MXC could have been forced, ultimately, to hire

additional personnel or at least to shift personnel from other facilities

to SVH when Read was absent.

2. Any suggestion that the prevention of free-riding is not a

legitimate business justification in Section 2 cases, as opposed to

Section 1 cases (the only type that Read cites in this section of his

petition [Pet. 12-15]), is incorrect. Numerous courts have applied

16

the doctrine in Section 2 actions. E.g., Trans Sport Inc. v. Starter

Sportswear Inc., 964 F.2d 186, 190-91 (2d Cir. 1992); Abcor Corp.

v. AM Int’l, Inc., 916 F.2d 924, 930 (4th Cir. 1990); Olympia Equip.

supra, 797 F.2d at 377-78 (a decision also undermining Read’s

suggestion that a free-rider justification might not apply where “the

challenged restraint was imposed by a monopolist on a...

competitor” [Pet. 12-13]). Commentators agree. F.g., 1 ABA Section

of Antitrust Law, Antitrust Law Developments 276 (4th ed. 1997)

(“Refusing to deal . . . may be justified [in Section 2 cases] where

it is intended to prevent free riding and to enforce a legitimate

limited distribution program.”).? Indeed, Professor Hovenkamp has

explained in some detail that the “most troublesome” aspect of the

Aspen case was the defendant’s failure to put forth the “obvious”

justification that when revenue from the joint venture was divided

according to actual use of the mountains as the plaintiff demanded,

the venture “permitted [plaintiff] to take a free ride on [defendant’s]

stronger market position.” Herbert Hovenkamp, Federal Antitrust

Policy § 7.5 at 264 (1994).'°

9. Similarly, if Read is suggesting that the free-rider justification might

not exist outside the context of “a vertical restraint imposed by a manufacturer

on a dealer” (Pet. 13), that suggestion is belied by numerous decisions

involving free-riding and horizontal relationships or agreements. E.g., SCFC

ILC, Inc. v. Visa U.S.A., Inc., 36 F.3d 958, 972 (10th Cir. 1994), cert. denied,

115 S. Ct. 2600 (1995); Rothery Storage & Van Co. v. Atlas Van Lines, Inc.,

792 F.2d 210, 229 (D.C. Cir. 1986), cert. denied, 479 U.S. 1033 (1987); Polk

Bros., Inc. v. Forest City Enters., 776 F.2d 185, 190 (7th Cir. 1985).

10. The Ahern article, cited at Pet. 13 n. 5 for the proposition that a

free-rider justification should not apply in § 2 cases, is inapposite. There,

the author is criticizing the use of the justification where the defendant claims

that the free-riding affects a market other than that in which the plaintiff and

defendant compete and that the refusal to deal would force the plaintiff to

enter a second market in order to compete with the defendant in the first.

Patrick J. Ahern, Refusals to Deal after Aspen, 63 Antitrust L.J. 153, 177 n.

126, 178 (1994). That factor is absent here. On the other hand, the author

notes that “[t)he classic free rider argument has, of course, succeeded in section

2 refusal-to-deal cases.” Jd. at 178.

17

3. Clearly, Dr. Read’s plan was to free-ride off MXC by forcing

it to devote its resources to covering his practice so that he would

not have to bear the cost of doing so himself. Dr. Read admitted

that MXC would incur the cost of providing him with twenty-four-

hour coverage rather than his incurring that cost himself (id. 1822).

MXC’s economic expert, based on Read’s testimony, had no

difficulty in concluding that Read was attempting to free-ride on

MXC. Id. 2862-63.

Free-riding occurs “when an action taken by an economic unit

results in uncompensated benefits to others.” Edwin Mansfield,

Microeconomics 456 (3d ed. 1979). Or, as Professor Hovenkamp

explains, “A free rider is a firm who takes free advantage of a service

or product that is valued by customers but provided by a different

firm.” Herbert Hovenkamp, Federal Antitrust Policy § 5.2b] at 188

(1994). Both definitions precisely fit the admitted facts here. Read

attempted to force MXC to provide him with a valuable service for

free so that he could compete with MXC by charging lower prices

permitted by his lower costs resulting from MXC’s subsidizing his

practice. MXC would have had to absorb a cost that Read otherwise

would have had to pay. Nothing in the antitrust laws required MXC

to “cut its own throat” in this manner, Illinois v. Panhandle E. Pipe

Line Co., 730 F. Supp. 826, 883 (C.D. Ill. 1990), aff’d, 935 F.2d

1469 (7th Cir. 1991), cert. denied, 502 U.S. 1094 (1992), to help

Dr. Read by providing him with free inputs for his business.

Amazingly, Dr. Read argues that he never “sought to

misappropriate any investment made by MXC,” and thus that “there

is no free rider problem in the first instance.” Pet. 12; see also id.

13. But that is exactly what he tried to do by attempting to force

MXC to cover his practice for free. MXC “invests” in, as closely

as possible, hiring only the number of radiologists necessary to

cover its own practice at the different facilities where it provides

services. By demanding that MXC supply employees for his

18

practice as well, Read sought to exploit some of the benefits from

those investments, at no cost, for himself. Add to this Read’s

testimony that he expected to obtain the lion’s share of radiology

business at SVH (perhaps ninety percent, he said [Tr. 1556]) and

his testimony that MXC ultimately might have to hire five additional

radiologists to cover his practice (id. 1593), and the free-rider

problem becomes particularly obvious and serious."

Just as amazingly, Dr. Read argues that, even if he was

misappropriating MXC’s investment, there was no free-rider

problem because MXC could simply jack-up its prices to its own

customers to recoup the cost of his free-riding. Pet. 18. This

argument is both incorrect and turns the antitrust laws on their head.

In any free-rider context, the firm exploited by free-riding can

attempt to increase its price to recoup its additional expense. For

example, in the vertical-nonprice-restraints context, see generally

Continental T. V. Inc. v. GTE Sylvania Inc., 433 U.S. 36 (1977), the

full-service dealer can increase its price to cover the additional

services it renders. The problem is that it then will lose sales to the

free-rider because the free-rider refuses to bear the full cost of the

benefits it receives from the exploited firm’s expenditures and thus

can charge a lower price:

The free-rider problem in Sylvania arose

because dealers who had spent money

11. Dr. Read claims that MXC’s providing coverage for him is no

different than “Home Depot accommodat[ing] a neighborhood hardware store

by being open on Sunday.” Pet. 14. For Read’s analogy to hold, the

neighborhood hardware store would have to be open on Sunday, need

additional employees to do so, and demand that Home Depot supply them

without telling Home Depot when it would have to supply them. If Home

Depot were required to accede to the store’s request, it would have to ensure

that it had excess employees ready to serve the neighborhood store. The

neighborhood store clearly would be free-riding on Home Depot’s investment

in its employees.

19

promoting Sylvania television sets risked

being undercut by other dealers — dealers

who had not made such expenditures, and

who thus were exploiting the market created

by dealers who had. The free riders could

undersell the other dealers because their costs

of promotion naturally were lower.

General Leaseways, Inc. v. National Truck Leasing Ass'n, 744

F.2d 588, 593 (7th Cir. 1984).

The important point is that the antitrust laws do not require

the exploited firm to shift the burden of a competitor’s free-riding

to its customers, but rather permit the exploited firm to require the

party receiving the benefit to pay for it. In the one decision cited

by Dr. Read, Chicago Professional Sports Ltd. Ptrsp. v. NBA, 961

F.2d 667 (7th Cir. 1992), cert. denied, 506 U.S. 954 (1992), the

court rejected the free-riding justification not because the exploited

firm, the NBA, was unable to increase its prices to customers of

basketball broadcasts, but because “[i]t may (and does) charge

members for value delivered,” and thus could charge the free-rider,

the Chicago Bulls, “for the Bulls’ [free] ride.” 961 F.2d at 675.”

4. Finally, Dr. Read argues that, even if he were free-riding,

the Eighth Circuit erred in not analyzing whether the additional

costs that MXC would incur in covering his practice “were in line

with the costs sought to be imposed on Dr. Read.” Pet. 12; see also

id. 14-16. According to Read, the Eighth Circuit’s failure to examine

this issue “is at odds with how the free rider issue has been analyzed

in other Circuits.” Jd. at 12. This is incorrect.

12. To the same effect is General Leaseways, Inc. v. National Truck

Leasing Ass'n, 744 F.2d 588, 592 (7th Cir. 1984) (emphasis added), where

the court rejected the free-rider justification because the competitors “charged

each other,” not their customers, for the service that allegedly was the subject

of free-riding.

20

Preliminarily, the court of appeals, of course, could not even

begin to analyze this question because Dr. Read had refused to

discuss a coverage agreement with MXC — at any price or on any

terms. Therefore, no one could know what, if any, cost would have

been imposed on Read." This lack of knowledge was Read’s fault,

not MXC’s. The evidence did show, however, that a fee was not

MXC’s primary concern in seeking a coverage agreement, that one

dollar a year might have been sufficient, and that Read would have

rejected even a one-dollar charge.’ Read’s claim now that “even a

demand for one dollar would have been anticompetitive” (Pet. 16)

is ridiculous. Even absent a legitimate business justification, conduct

cannot be predatory unless it is unreasonably exclusionary, U.S.

Healthcare, Inc. v. Healthsource, Inc., 986 F.2d 589, 596-97 (ist

Cir. 1993), and Read’s own economic expert testified that his paying

even $100 for backup “would represent a small cost” (Tr. 716).

Moreover, it is not clear, even from Dr. Read’s petition to this

Court, what precise analysis he wanted the Eighth Circuit to apply

that it did not. At various points, Read suggests that the court of

appeals erred by not comparing MXC’s costs in providing coverage

with the cost it demanded from him; by not applying a Sherman

Act, Section 1 full-blown rule-of-reason analysis (Pet. 14 [criticizing

the court of appeals for not determining whether the “restraint . . .

on Dr. Read was reasonable”]); by not examining whether MXC’s

legitimate business justification was “pretextual” (Pet. 15); or by

not applying a “least-restrictive-alternative” analysis by which

MXC’s refusal to cover without a contract apparently would be

predatory in Read’s view if obtaining a coverage agreement “ ‘went

13. Thus, Read’s assertion that the Eighth Circuit suggested that “MXC

could impose any cost it wished on Dr. Read” (Pet. 16 [emphasis in original])

mischaracterizes the court’s opinion.

14. The lack of evidence in the record about what amount, if any, Read

might have paid for coverage also undercuts his policy argument that this

case presents an appropriate vehicle for this Court to examine the “raising-

rivals’-costs” theory. Pet. 22.

21

much further than needed for the limited articulated purpose’ ” for

it (id. [quoting Ohio-Sealy Mattress Mfg. Co. v. Sealy, Inc., 585

F.2d 821, 829 (7th Cir. 1978), cert. denied, 440 U.S. 930 (1979)]).

Other than one oblique, unsupported claim that MXC’s asserted

legitimate business justifications were pretextual in the “Summary

of the Argument” portion of his brief below (Appellee’s Br. 21),

Dr. Read did not even raise these arguments for the Eighth Circuit

to consider.'* But even if he had, the court of appeals would have

rightly rejected them.

The court of appeals should not have identified and then

balanced the procompetitive and anticompetitive effects of MXC’s

conduct, even had Dr. Read raised the issue below. Although this

type of analysis is frequently necessary in a full-blown Sherman

Act, Section 1 rule-of-reason analysis to determine whether an

agreement, on balance, unreasonably restrains competition, whether

particular conduct undertaken unilaterally is “predatory” for

purposes of Section 2 is an entirely different issue. Sections 1 and

2 are different statutes with different standards of analyses. Indeed,

this Court has explained that Section 1 is a “sterner” statute because

the antitrust laws are inherently more suspicious about

conspiratorial activity than unilateral conduct. Copperweld Corp.

v. Independence Tube Corp., 467 U.S. 752, 768-769 (1984).

Both the decisions interpreting Section 2 and commentary

show that courts do not apply a Section 1-type rule-of-reason

analysis in determining whether particular conduct is predatory

for purposes of Section 2. E.g., Bell v. Dow Chem. Co., 847 F.2d

15. Of course, “the burden of proving that a proffered business

justification is invalid or pretextual is placed on the plaintiff in a § 2 case.”

III Areeda & Hovenkamp { 658f at 127 (citing cases); see also IIIA Areeda &

Hovenkamp { 773¢ at 216 (“it should be the plaintiff’s obligation to persuade

the judge or jury that the justification should be rejected”) (quoted and relied

on by Dr. Read at Pet. 15 n. 7).

22

1179, 1185-86 (Sth Cir. 1988) (explaining that “Aspen does not

hold that the jury can weigh the sufficiency of a legitimate business

justification against the anticompetitive effects of a refusal to deal’”’).

Professors Areeda and Hovenkamp agree and explain why:

[Ojnce a proffered business purpose has been

accepted as asserted in good faith and not as

a pretense, the defense does not require any

kind of “balancing” of social gains against

competitive harms, except in the gross sense

that trivial justifications should be

disregarded.

Ill Areeda & Hovenkamp { 658f at 123. No balancing or full

rule-of-reason analysis is appropriate because “the purpose of

the business justification inquiry is not to measure the degree

of net competitive harm, but rather to aid the decision-maker in

characterizing the nature of the defendant’s conduct [as

predatory or not).” /d.'*

Similarly, although some courts have folded a “‘least-restrictive-

alternative” requirement into full-blown Section 1 rule-of-reason

analysis, others reject it, Rothery Storage & Van Co. v. Atlas Van

Lines, Inc., 792 F.2d 210, 227 (D.C. Cir. 1986) (noting that this

Court did not intend lower courts to “calibrate degrees of reasonable

necessity”), cert. denied, 479 U.S. 1033 (1987). Again, respected

commentators agree: “A general antitrust tribunal is not in a good

position to determine whether a less restrictive alternative is in fact

viable under the circumstances.” III Areeda & Hovenkamp { 658f2

at 129.

16. Indeed, the authors note that “in Aspen, the Court did not call for

any balancing of the social gains from refusing to deal or cooperate with

rivals based on legitimate business purposes against the losses resulting from

that refusal.” IIIA Areeda & Hovenkamp { 772c2 at 192.

23

Finally, even were there a least-restrictive-alternative

requirement, Dr. Read suggested no reasonable alternative that

would have solved the free-rider problem, or, even if free-riding

were not a legitimate business justification, MXC’s concern about

not knowing when Dr. Read would be present at SVH and thus

when it would have to cover his practice. The burden of raising

and proving a less restrictive alternative was Dr. Read’s. Cf. United

States v. Brown Univ., 5 F.3d 658, 668-669 (3d Cir. 1993) (noting

that plaintiff bears the burden, in § 1 cases, of proving that defendant

could have achieved comparable benefits through a less restrictive

alternative).

In sum, there is no conflict between the Eighth Circuit’s opinion

and any opinion of this Court or any court of appeals considering

whether or under what circumstances a legitimate business

justification exists. Rather, after reviewing the evidence itself, it

was Clear to the Eighth Circuit, as it had been to the district court,

that MXC had legitimate reasons to be concerned about providing

Dr. Read with coverage without an agreement.

Il.

THIS CASE PRESENTS NO LEGAL OR POLICY

QUESTION ON WHICH THIS COURT’S GUIDANCE IS

NEEDED.

A. The Decision Will Not “Pave[ ] The Way For Exclusionary

Conduct”’.

1. To argue as Dr. Read does that the Eighth Circuii’s decision

“paves the way for exclusionary conduct” and to suggest that health-

care providers with market power, based on the Eighth Circuit’s

opinion, will flock to raise their rivals’ costs and then cry free-

riding and cite the court of appeals’ opinion (Pet. 22) is simply

hyperbole that unfairly denigrates the abilities of federal-court

24

judges to apply well-worn and acknowledged antitrust principles.

If a plaintiff, as here, refuses to cooperate with a rival to obtain the

benefit it seeks or attempts to free-ride, or if other legitimate

business justifications exist for the challenged conduct indicating

that it was not predatory, then a court should so hold. On the other

hand, if the plaintiff proves the essential elements of a Section 2

violation and that, under Section 4 of the Clayton Act, the

defendant’s unlawful conduct caused the plaintiff’s damages, then

the court should and will so hold.

2. Neither the antitrust laws nor the Eighth Circuit is “hostile

to would-be ‘price-chopping’ competitors in monopolized markets.”

Pet. 23. But Dr. Read, unlike the Eighth Circuit, failed to recognize

a simple antitrust principle — that the goal of antitrust law, and

thus of courts interpreting Section 2, is “to permit firms to enter

and operate in markets to the extent they are capable of supplying

their own inputs, and without interference from dominant firms.”

IIIA Areeda & Hovenkamp { 771b at 176 (emphasis in original).

In sum, “[b]rand new firms are expected to make their own way in

the market,” Olympia Equip. supra, 797 F.2d at 370; bear their

own costs; and not hinder their competitors by attempting to force

them to share their resources without consideration of the effect on

their competitor’s operations.

B. This Court Does Not Need To Reaffirm That The Antitrust

Laws Apply To The Health-Care Sector.

1. This case has no “special significance” (Pet. 23) simply

because it involves participants in the health-care sector. At this

juncture in the history of antitrust jurisprudence, it hardly is

necessary for this Court “to reaffirm that the antitrust laws apply to

the health care industry.” Jd. 24. This Court applied the antitrust

laws to physicians as early as 1943 in American Medical Ass’n v.

United States, 317 U.S. 519 (1943); and since 1976, it has decided

eleven antitrust cases involving the health-care sector, from Hospital

25 ,

Bldg. Co. v. Trustees of Rex Hosp., 425 U.S. 738 (1976), to Summit

Health Ltd. v. Pinhas, 500 U.S. 322 (1991). Additionally, numerous

cases from every court of appeals have applied the antitrust laws to

almost every type of participant and issue in the health-care sector.

Cf. Boulware v. Nevada, 960 F.2d 793, 797 (9th Cir. 1992) (“The

antitrust laws apply to hospitals in the same manner that they apply

to all other sectors of the economy. Health care providers are

exposed to the same liability and entitled to the same defenses as

businesses in other industries.”’).

2. Finally, to suggest as Dr. Read does that the Eighth Circuit’s

“summary disposition of this case reflects a judicial approach which

resists application of the antitrust laws to health care markets” is

erroneous and unfair. The Eighth Circuit has a rich history of

examining antitrust issues in the health-care sector. E.g., FTC v.

Freeman Hosp., 69 F.3d 260 (8th Cir. 1995). Moreover, the antitrust

principles and analysis that it applied in this case are the same that

it has applied in antitrust cases involving other industries. E.¢.,

National Ass’n of Review Appraisers & Mortgage Underwriters,

Inc. v. Appraisers Found., 64 F.3d 1130, 1136 (8th Cir. 1995), cert.

denied, 116 S. Ct. 1676 (1996) (holding that plaintiffs failed to

prove causation; rather, they “blamed everyone but themselves... ,

but their problems can be traced directly back to [their] corporate

office”). In sum, there is no indication that the Eighth Circuit is

reluctant to apply, or that it misapplied here, antitrust principles in

cases focusing on health-care markets.

Fi ad

26

CONCLUSION

This Court should deny the petition for certiorari.

Respectfully submitted,

JOHN J. MILES

Counsel of Record

OBER, KALER, GRIMES

& SHRIVER, P.C.

1401 H Street, N.W.

Suite 500

Washington, D.C. 20005

(202) 326-5008

WILLIAM P. FULLER

FREDERICK M. ENTWISTLE

JAMES E. MOORE

WOODS, FULLER, SHULTZ

& SMITH P.C.

300 South Phillips Avenue

Suite 300

Sioux Falls, South Dakota 57104

(605) 336-3890

Attorneys for Respondent